HomeMy WebLinkAbout04/03/2001, 2 - AWARD A CONTRACT FOR TRANSIT SERVICES TO FIRST TRANSIT, INC. council M °°BDac April 3,2001
j acEnaa RepoRt 1�N°°b.
CITY OF SAN LUIS OBISPO
FROM: Mike McCluskey, Director of Public Works
Prepared By: Austin O'Dell, Transit Manager
SUBJECT: AWARD A CONTRACT FOR TRANSIT SERVICES TO FIRST TRANSIT,
INC.
CAO RECOMMENDATION
1. Authorize the City Administrative Officer to enter into a three-year contract with First
Transit, Inc. to provide operations and maintenance services for SLO Transit for the period
July 1, 2001 through June 30, 2004, with the possibility of two one-year extensions for
acceptable service.
2. Direct the CAO to implement transit cost savings, and equipment acquisition described in
the Fiscal Analysis section of this report.
REPORT IN BRIEF
The current contract with Laidlaw Inc. for operations and maintenance of SLO Transit expires on
June 30, 2001. The City solicits requests for proposals (RFP) for transit operations and
maintenance every three years. The City received three proposals on February 9, 2001 from
Laidlaw Transit Inc., First Transit, Inc., and Coach USA. The proposals varied in cost by only three
percent(3%) from the lowest to the highest cost proposal.
A Selection Committee consisting of representatives of Public Works, Finance, and the City
Attorney's office evaluated the proposals. The selection criteria included overall understanding of
the scope of work, financial stability, and quality of service. After evaluating the proposals, staff is
recommending to award the transit services contract to First Transit, Inc. First Transit exceeded all
the minimum requirements of the RFP and demonstrated the corporate philosophy, financial
stability, and leadership that was superior over the other two proposals.
This recommendation represents a change from the current Contractor—Laidlaw Transit, Inc.
Laidlaw, Inc., the parent company of Laidlaw Transit, Inc., is financially unstable and represents a
risk too high for a recommendation to continue as our transit provider.
As expected, the contract cost increased by forty percent (40%) over the current contract cost. In
order to reconcile the cost increase with the transit revenues, the City will need to implement both
operational and funding strategies. In terms of operational strategy, staff recommends that the City
discontinue the Pilot Late Night Service. This Pilot Service was intended to be a six-month trial
service to determine the service demand on weekday during the hours from 7:00 p.m. to 11:00 p.m.
This service generated only five passengers per hour and a farebox ratio of 2%.
Council Agenda Report—A--drd Contract for Transit Services Page 2
The Mass Transportation Committee (MTC) differs. with this recommendation, and offer options
discussed in the report.
In terms of funding strategies, the City will need to pursue our fair share (representing $70,271
dollars) of TDA funds in the unincorporated areas located within SLO Transit's Service Area. The
second funding strategy is to increase the Cal Poly contribution from $187,000 to $233,000. Staff
has been communicating with Cal Poly in regards to this matter. The third funding strategy is to
implement a fare increase in FY 2002-03 to maintain the State mandatory farebox ratio of 20%.
The final funding strategy is to closely review our existing allocation method, and re-consider the
current policy regarding the allocation of indirect costs. Staff will work with the MTC to acquire
their input as these strategies are develop into City Council recommendations.
DISCUSSION
The current service contract for operations and maintenance for SLO Transit services expires on
June 30, 2001. In consultation with the MTC and Cal Poly, the request for proposals (RFP) for a
new contract was developed. At its meeting of December 12, 2000, the Council approved the RFP
and authorized the CAO to solicit proposals for operations and maintenance of SLO Transit services
within the City. A pre-proposal meeting attended by ten transit contractors was held on January 9,
2001 to respond to questions regarding the RFP and to clarify service requirement issues. On
February 9, 2001, the City received three proposals for the service contract. Responding contractors
included Laidlaw Transit, Inc. (the current provider), First Transit, Inc. and Coach USA, Inc.
The three proposals were reviewed by a City Selection Committee, which included members from
the Public Works Department, City Attorney's Office and Finance Department. Attachment 2
outlines the entire ranking process regarding the received proposals..
All three proposals varied in style, focusing on the key issues that each of the contractors felt were
important for delivering quality service for the City of San Luis Obispo. As Council will recall from
the RFP process, a major restructuring of the contract is being undertaken. In essence, the
contractors were asked to provide proposals which reflected as much on quality of service,
employee vitality and attitude as well as the more common cost issue. Each proposal was ranked on
a series of criteria that the Selection Committee deemed important for comparing each of the
submitted scopes of work.
All three contractors were asked to participate in oral interviews with the Selection Committee to
answer questions regarding their proposals, introduced the City to their corporate attitudes and
demonstrate their philosophies for providing the quality transit service that are important to SLO
Transit. Each of the contractors demonstrated an aptitude for providing transit service for our City.
However, one firm, First Transit, Inc. clearly demonstrated a corporate attitude, financial stability
and proposed work team that was superior to the other two proposals.
The First Transit,Inc. Proposal—Quality First
In general, not only did the First Transit proposal meet minimum requirements, it exceeded them.
The First Transit proposal contains many new and innovative ideas that lead them to be the
consensus candidate contractor for our services. Highlights of these elements are:
n
�-2
Council Agenda Report— - and Contract for Transit Services Page 3
• Passenger Attitude and Service. The overwhelming philosophy in the First Transit
proposal was that passengers come first - an interesting play of words on the name of
their company. In order to restore public perception of the SLO Transit system this
type of corporate attitude for our transit provider is a must.
• Driver Attitude and Service. First Transit recognizes the value of its experienced
drivers. As result, First Transit is committed to hiring the current driver labor force
and providing a $500 sign-on incentive bonus. First Transit has innovative employee
incentive programs that are designed to increase morale of the employees.
First Transit also proposes to improve driver wages for the SLO Transit employees in
order to proactively hire new drivers and also retains quality drivers that will perform
our transit service.
• Resident Manager — A leader in the Industry. The First Transit proposed Resident
Manager, Kim Blakeman, is an innovative leader in transit industry. While with
Seattle Metro, he implemented an innovative transit system strategy that optimized
feeder van service to the basic fixed route bus system to increase ridership and access
to the public transportation system. This service design is now being used as models in
other communities in the nation and might be a possibility here in San Luis Obispo.
• Company Profile. The financial health of First Transit is solid. First Transit has
published profits for the past four years and will likely continue as a growth leader in
the transit industry.
• Maintenance Tracking Software and Hardware. First Transit clearly led all other
proposers in the use of innovative techniques and information services to keep costs
low. As part of their proposal, First Transit will be providing a maintenance software
package that will monitor the preventative maintenance and overall health of each SLO
Transit vehicle. This software is proven and tested and is already used by First Transit
nationwide to track vehicle performance and optimize parts distribution and cost
recovery. In addition, First Transit will make the information and reports available to
the City so that vehicle replacement and performance monitoring can be closely
tracked. This information should help the City in better scheduling major vehicle
rehabilitation and replacement — a service we currently do not receive. No other
proposal offered a proven maintenance package to the City that would provide this
service.
• Experience with similar services. First Transit currently provides similar service to
the SLO Transit system at several transit properties in California, which include the
following: Foothill Transit Authority, Kern County Transit, Los Angeles Metropolitan
Transit Authority, and San Diego County Transit. The Selection Committee
recognized that the proposed project team demonstrated substantial experience that will
benefit the SLO Transit system and lead to smooth transition of contractors. Based on
staffs reference check as part of the evaluation process, the transit properties highly
recommend First Transit.
Cost
The First Transit proposal is a substantial increase over the current contract costs for transit
services. It is important to note that all three of the proposals were in excess of the current contract
�2 �3
Council Agenda Report—f...and Contract for Transit Services Page 4
and were very similar in proposed yearly cost. Because the RFP was specifically structured so that
the award of this contract should not be on cost alone, but rather on service quality issues
(responsiveness, the ability to demonstrate a qualified project team, and financial ability) the City
was able to reduce the proposed contract service cost by fine tuning the First Transit proposal to the
priority elements that we feel will benefit our community. A detailed description of the funding
issues for the transit contract is described in the Fiscal Analysis section of this report.
Laidlaw Transit,Inc—Why a change in contractors?
Changing service contractors, particularly for transit services, is always a difficult task and decision
for a community to make. Normally, an existing contractor's insight into the current service levels
and community lead to a significant advantage when re-bidding for contract services. So why was
Laidlaw not the choice for the upcoming transit service contract?
Financial.Instability
In essence, the potential risk of corporate and operational changes in Laidlaw Transit was just too
high for a continued recommendation as our transit service provider.
Laidlaw, Inc., the parent company of Laidlaw Transit, Inc, is financially unstable. As part of any
multi-year service contract entered into by the City, the financial stability of the contactor is a
critical issue. Attachment 3 is a memorandum from the Director of Finance that explains the
auditor's statement for Laidlaw, Inc. as an on-going concern. As identified in that report, Laidlaw,
Inc. is financially insolvent and will require a major restructuring in the next few years. While
unknown at this time as to what that restructuring may consist of, there is no doubt that significant
operating changes, cost savings measures and possible sale of solvent subsidiaries (such as Laidlaw
Transit, Inc.) may take place.
Why is this important to SLO Transit and the City? By its very nature, transit service must be
reliable and dependable. Because it is unknown what changes may be required at Laidlaw Transit to
meet the needs of it's parent corporation, there is no assurance that service levels and performance
of employee may not suffer during the next contract period. These changes might even include the
acquisition of Laidlaw Transit by another company to provide the parent corporation with additional
revenue.
Cost—Not an Issue
All three of the proposals were very similar in the operations proposal prices for the City SLO
Transit contract. In fact, the basic contract costs for all the three proposals varied by only three
percent (3%) on a potential $1.9 million dollar annual contract.
With all three contract proposals being so close, costs of each service provider became a minor
issue for the selection committee in comparing the proposals and obtaining final rankings for the
contractors.
1
Council Agenda Report —%. .drd Contract for Transit Services Page 5
Public Image and Operational History
It is only fair to acknowledge some of the difficulties we have experienced with the current Laidlaw
Transit contract. The pair of transit related fatalities experienced in 1999 and 2000 was not normal
for the City of San Luis Obispo nor for Laidlaw. However, the public perception of the safety of
the SLO Transit system suffered tremendously as a result, and Laidlaw's response to these issues-
was not ideal.
Concerning corporate management philosophy and consistency, Laidlaw in the last three years, has
assigned three different Resident Mangers to the SLO Transit system and this has resulted in ever
changing management styles for the SLO Transit employees and patrons. The current Resident
Manager has been doing a good job of addressing some of these operational issues and has
improved the public perception of SLO Transit. However, as stated in the discussion above, staff
remains critically concerned that restructuring of the Laidlaw Corporation may have dramatic
effects at the local level, which could result in problems similar to those we have experienced.
It is important to note that Laidlaw Transit has done a fair job in assisting the City in providing
transit service thus far. By no means should the Council, or the community, believe that Laidlaw
Transit is not a company that could provide the basic transit service for SLO Transit. However, the
issues as identified above all lead to a staff recommendation that Laidlaw Transit is not the best
contractor to perform our transit service at this time.
FISCAL ANALYSIS
The cost of providing transit service for the next three years will be as follows:
Table 1 —Annual Contract
, CCosts
�r7 �
FY 2001-02 $1,732,600
FY 2002-03 $1,825,850
FY2003-04 $1,870,000
As anticipated, current market conditions have lead to a significant cost increase in the transit
service contract. These costs represent a change of 40% from the current contract levels. So with
this tremendous increase, how will SLO Transit balance its annual budget? Transit services are
provided by funds from the State of California Transportation Development Act (TDA), the State
Transportation Assistance (STA), operating assistance from the Federal Transit Administration
(FTA), and the farebox. Based on projections of transit funding sources, the acquisition of new
funding and implementing changes in service levels, SLO Transit will be able to remain fiscally
healthy if the following operational and funding strategies are implemented. A final transit budget
on these issues will be incorporated in the FY 2001-03 Financial Plan.
a -s
- Council Agenda Report—:award Contract for Transit Services Page 6
Operational Strategy
Discontinue Pilot Program for Late Night Service
The City needs to'discontinue the Pilot Late Evening Service. This service was implemented in
September 1999 for a six-month trial basis to determine the service demand and success of late
night evening transit service. To say the least, the demand and success of this demonstration
program have been abysmal. Staff first identified this issue in mid-2000 and recommended to the
MTC that.the service be discontinued. After healthy discussion, the MTC requested continuation of
the service for an additional period and that additional marketing be provided to promote the service
prior to discontinuation.
A direct marketing campaign for this service was undertaken in fall 2000 to coincide with the Cal
Poly fall quarter. After promotional efforts, late evening service still generates only five passengers
per hour and a farebox ratio of 2%. As a result of the Pilot Late Evening Service, SLO Transit's
farebox ratio has fallen below the State regulatory standard of 20%; thus, SLO Transit is in jeopardy
of loosing its STA funds. It is important to note that costs reflected in Table 1 already assume
reduction in late night service. The Pilot Late Evening Service demonstrated that service demand
on weekdays from 7:00 p.m. to 11:00 p.m. was insufficient and unproductive to continue the service
on a permanent basis. Thus, it is necessary to direct the public's money where it does the most
good.
MTC considered the discontinuation of late night service at their regular meeting on March 14,
2001. The MTC did not concur with staff's recommendation and instead recommended to Council
two alternatives, which will be discussed.as part of the Concurrence Section later in this report.
Funding Strategies
Additional TDA Allocation—SLO County Apportionment
Another necessary endeavor is to pursue the City's fair share of TDA funds for transit services in
the unincorporated areas located within SLO Transit's service Area. SLO Transit's service area
encompasses primarily the city limits, and also some of the unincorporated areas of the County,
which include Orcutt Road, Foothill Road, Cal Poly, and the Airport,. TDA guidelines specifically
allow transit providers to claim TDA funding for basic transit services provide beyond their
jurisdictional boundaries. Because the City is the primary transit provider in these unincorporated
areas, the City should receive compensation from the TDA apportionment for these services. Based
upon review of existing funding levels, Cal Poly housing population estimated at 2800, the City's
additional apportionment from TDA would be approximately $70,271 or 2.5 % of the County's
current TDA allocation.
Precedent has already been set for this request. Annually, the City receives State Transit Assistance
(STA) funding on behalf of Cal Poly residents. Obviously this issue will result in a nominal loss in
TDA revenue that the County uses for streets and road maintenance. However, additional
maintenance revenues such as the 2000-01 Governor's apportionment are now available to the
County for road repair and as such the small loss in TDA should not overly burden existing service
levels. Representatives from the City,.County, and SLOCOG will pursue this matter.
a- �
Council Agenda Report —E,..and Contract for Transit Services Page 7
Cal Poly Contribution
Staff has coordinated the cost increases for the proposed contract with representatives of Cal Poly.
While increases in the transit contract cost result in increased revenues being requested from Cal
Poly to continue the Zero Fare Program, Cal Poly staff has acknowledged the need to keep pace
with current industry costs in providing this service. Table 2 indicates the estimated Cal Poly
contributions that would be necessary for the proposed contract.
Table 2—Cal Poly Zero Fare
Vim - I faDiJ
FY 2001-02 $233,096
FY 2002-03 $240,089
FY2003-04 $247;292
Cal Poly has indicated that they are addressing the Zero Fare issue on two fronts. First, the
University is pursuing an increase to their parking pass cost with a percentage going to cover the
transit subsidy shortfall. If the increase does not receive approval through the University's approval
system, Cal Poly proposes to institute a user fee for the Zero Fare Program similar to that proposed
in Fall 2000 to cover the transit subsidy shortfall. The current Cal Poly agreement for the Zero Fare
Program is scheduled to expire this fiscal year. As such, a new agreement will be returning to
Council in the next few months, which will solidify these funding issues based upon the success of
Cal Poly in funding the subsidy shortfall.
Fare Increase
The Transit Manager has forecast funding and expense levels for SLO Transit service based upon
current cost and budget assumptions. It does not appear that a fare increase is required to cover the
difference for the new contract cost proposal for FY 2001-2002.
However, based upon service levels, farebox recovery ratios and savings assumptions in the above
items, annual farebox revenues may not meet the minimum 20% recovery ratio required under TDA
and STA guidelines. As a result, a fare increase may be needed in an upcoming future year
(possibly as early as FY 2002-03) to meet legislative requirements for these funding sources. Staff
will be working the next few months and into next fiscal year to determine if fare increases will be
necessary and instigate appropriate actions to address ridership concerns. MTC will have the
opportunity to review the matter of a fare increase and make a recommendation to the City Council.
City Indirect Costs
As part of the current FY 2001-03 Financial Plan, all above mentioned funding issues will be
reviewed. However, even if all of the above items are accomplished there may still be a small
shortfall in the transit budget. A last strategy would change the current policy regarding allocation
of indirect costs. It is important to remind ourselves that the primary concern of the Transit
Enterprise Fund is to maintain the highest level of transit service for our citizens.
Currently, the transit fund is charged fees for various City operational service costs for monitoring,
review and support of transit issues. Similar to the Golf Fund, it may become necessary that the
a - �
Council Agenda Report—Ayvard Contract for Transit Services -- Page 8
Council review a policy of having the General.Fund support some indirect administrative costs for
the transit system. The CAO has great reservation about this strategy, however, and it is unknown
at this time if this policy decision will be necessary. Lastly, the Finance Department will closely
review the indirect cost allocation methodology to ensure its consistency to all City operations.
CONCURRENCES
Concurrence 1. The City Selection Committee, consisting of staff from the Departments of
Finance, Public Works, City's Attorney's office, and Maintenance have evaluated the proposals and
concur with the CAO Recommendation.
Concurrence 2. Issues of Cal Poly contributions towards the Zero Fare Program have been
reviewed with Cal Poly staff and written correspondence may be forthcoming prior to the Meeting
of April 3, 2000.
Concurrence 3. As previously mentioned, the MTC was involved in the development of the RFP,
which sets the level of service desired by the City. The proposed contract will implement this level
of service. The MTC bylaws, however, do not include public contracting responsibilities (typically
not within the purview of any City advisory bodies), and therefore the proposed contract itself has
not been taken to the MTC. In addition, there are confidentiality clauses associated with such
proposals that would inhibit public review at the evaluation and interview stage. The MTC will,
however, have input into some of the long-term funding strategies discussed in this report.
The issue of discontinuation of Late Night Service was considered by the MTC at its March 14th
meeting. The MTC did not concur with staff's recommendation and instead recommended to
Council two alternatives:
1) Continue Late Night Service at its existing service levels. The MTC was not specific as to
how this service should be funded but felt that no reduction should be made at this time.
2) If fixed route Late Night Service is discontinued, the City should replace it with some form
of demand response service.
Staff does not concur with the MTC recommendations at this time. Final funding levels and budget
issues will need to be resolved prior to committing limited funds to service hours that have
repeatedly not demonstrated sufficient demand to warrant continuation nor meets farebox recovery
requirements. The issue of late night service and how best to implement an appropriate level of
service and cost level should be addressed in the upcoming Short Range Transit Plan (SRTP) update
scheduled for FY 2001-02. . It is possible that as part of that SRTP process, late night demand
response service may be possible and implemented to provide additional services.
Concurrence 4. Staff has consulted with the City Attorney's to review the fairness and integrity of
the selection process. As result, the City Attorney's Office concurs that the Selection Committee
utilized a fair process to conclude with the recommendation to award the SLO Transit Services
contract to First Transit.
�1\
Council Agenda Report-h..and Contract for Transit Services Page 9
ALTERNATIVES
Alternative A - The Council may decide to delay the award of contract for operations and
maintenance of public transit fixed route services. This delay could potentially jeopardize the
successful contractor's ability to organize a smooth transition and service start-up particularly for
employee retention. A major delay of any sort in awarding a contract could result in interruption of
transit service if adequate time is not given to the successful contractor to implement the necessary
transitory actions.
Alternative B. Award the contract to First Transit, Inc. but give staff additional direction regarding
the service level changes and funding assumptions described under the Fiscal Analysis section to
address MTC concerns and recommendations.
Attachments:
Attachment 1 - Draft Agreement for First Transit and the City of San Luis Obispo for Operations
and Maintenance for Public Transit Fixed Route Services
Attachment 2 —Proposal Review and Ranking Process Description
Attachment 3 - Memorandum from the City's Director of Finance regarding the Auditor's
Statement
hCouncil Agenda Reports\CAR SIA Transit Award 2001 v2.doc
�- 9
ATTACHMENT 1
*** DRAFT *'�*
AGREEMENT
BETWEEN
CITY OF SAN LUIS OBISPO
AND
FIRST TRANSIT INCORPORATED
G:\Transit\Transit Current Projects\Operations RFP\Procurement Period\Agreement.doc J r
n
TABLE OF CONTENTS
No. TOp1C page
Agreement Cover
1. Purpose 4
2. Scope-of-Work 4
3. Time Period 4
4. Maximum Obligation 4
5. Price Formula 4
6. Invoice 6
7. Payment 6
8. Farebox Revenue 6
9. Control 6
10. Management 6
11. Medical Assistance to Passengers 7
12. Uniforms 7
13. Modifications of Agreement 7
14. Contract Assignments 7
15. Disputes 7
16. Stop-Work 8
17. Termination 8
18. Communications 9
19 Proprietary Rights 10
20. Shortages and Delays 10
21. Audit 10
22. Transportation Data Reporting 11
23. Workers' Compensation 11
24. Contractor's Employee Responsibilities i 1
25. Transit Employee Protective Agreements 11
26. Insurance 12
27. Letter of Credit 14
28. Fidelity Bond 14
29. Prime Contractor Responsibilities 14
30. Nondiscrimination 14
31. Disadvantage Business Enterprise 15
32. Conflict of Interests 15
33. Conflict of Transportation Interests 15
34. Title to Supplies and Equipment 15
35. Headings 16
36. Retention of Records 16
37. Right to Adequate Assurance of Performance 16
38. Indemnification 16
GATransit\Transit Current Projects\Operations RMProcurement Period\Agreement.doc _/
No. TOp1C Page
39. Merger 16
40. Additional Services 17
41. Changes in Scope-of-Work 17
42. Conflicting Use 17
43. Liaison 17
44. Failure to Perform 17
45. Liquidated Damages 18
46. Waivers 18
47. Interpretation, Jurisdiction, and Venue 18
48. Severability 18
49. Debarred Bidders 18
50. General Equipment-Requirements 18
51. Public Contact Code Section 10162 Questionnaire 19
52. Integrity Certification 19
53. Energy Conservation 20
54. Air Pollution 20
55. Notice of Federal Requirements 20
56. Environmental Violations 20
57. Privacy 20
58. Arbitration 20
59. Disclosure of Lobbying Activities 20
60. Non-Collusion Affidavit 21
61. Interest of Members of or Delegates of Congress 21
52. Drug-Free Workplace 21
63. Contractor's Representations, 21
64. Contractor's Eligibility 21
65. Program Fraud and False or Fraudulent Statements and
Related Acts 21
66. Governing Law 22
67. Patent Rights 22
68. Attorneys' Fees 23
69. Year 2000 Compliance 23
70. Recycled Products 24
71. Access Requirements for Individuals with Disabilities 24
GATransit\Transit Current Projects\Operations RMProcurement Period\Agreement.doc
o7-/ '
J
AGREEMENT
THIS AGREEMENT is by and between the CITY OF LUIS OBISPO, California, hereinafter
referred to as "CITY" and "FIRST TRANSIT INCORPORATED", hereinafter referred to as
"Contractor".
WITNESSETH
WHEREAS, Contractor has the management and technical personnel, expertise and
other assets useful for the support of City's transportation project; and
WHEREAS, Contractor is desirous of providing such services;.
NOW, THEREFORE, in consideration of the foregoing recital and covenants and
agreements of each of the parties herein set forth, the parties hereto do agree as follows:
1. Purpose. City hereby contracts with Contractor to provide transportation management,
maintenance, and operations services upon the terms and conditions hereinafter set
forth.
2. Scope-of=Work. Contractor shall provide the services set forth in Exhibit A,
supplemented by Exhibit B except when inconsistent with Exhibit A. Subject to the
terms and conditions set forth in this agreement, Contractor will provide the services to
be rendered as set forth in the Scope of Work in Exhibit A and subsequent addendums
per Form 1.3 attached hereto and by reference incorporated herein and made a part
hereof.
3. Time Period. The term of this agreement shall be from July 1, 2001 to June 30, 2004,
inclusive, with an option to extend for two one-year terms starting July 1, 2004 and
ending June 30, 2006. Contractor-shall commence transit service operations of City's
transportation project on July 1, 2001, and continue operation through June 30, 2004
within the budget defined under the heading "Maximum Obligation".
4. Maximum Obligation. City agrees to pay Contractor in consideration for its services
as described herein. The maximum cost to be paid by City to Contractor shall not
exceed $1,732,599 during the first year; $1,825,838 during the second year; $1,869,676
during the third year. The fourth and fifth subsequent years, City and Contractor
shall mutually negotiate the price formula.
5. Price Formula. The price formula will be based on a two (2) tiers. City agrees to pay
the Contractor for performance of the service set forth in this Agreement as follows:
G1Transit\Tmnsit Current Projects\Opemtions RMProcurement Period\Agreement.doc
a-�a
1\
a. Tier 1. Payment of a fixed mileage rate for revenue service as follows:
Fixed Mileage
Rate
Fiscal Year Per Revenue Mile
2001-02 $3.62
2002-03 $3.82
2003-04 $3.91
b. Tier 2. Payment of the incremental fixed mileage rate for the electronic registering
farebox system as proposed in Exhibit B as follows:
Incremental Fixed
Mileage Rate
Fiscal Year Per Revenue Mile
2001-02 $0.24
2002-03 $0.24
2003-04 $0.24
Contractor shall agree to the terms and condition Paragraph 50 of this Agreement..
Revenue vehicle miles will be calculated by determining the mileage of the actual
distance that each bus travels during revenue service. Revenue vehicle miles during
revenue service are solely based upon the published route alignment approved by
City.. Mileage and time from the garage to the first scheduled service stop and the
mileage and time from the last scheduled service stop to the garage are excluded.
Time for driver meal break are specifically excluded from use in the price formula.
The revenue mileage rate shall compensate Contractor for vehicle operator's wages
and fringe benefits, purchase of bus pans and components, purchase of fuel, oil,
lubricants, grease, batteries, mechanic supplies, antifreeze, and tires, bus cleaning
supplies, radio maintenance. The revenue vehicle mileage rate assumes all variable
and consumable costs of the Contractor with the exception of heavy maintenance.
Refer to Exhibit A, Scope-of-Work.
c. City Responsibilities. City shall provide the facilities located at 29 Prado Road,
San Luis Obispo, California, which includes Operations Offices, dispatch area,
driver's lounge, garage and parking facilities, licensed mobile radio system and
radio system maintenance, vehicles and licenses, tickets, coupons and transfers,
coupon and ticket sales, printed timetables, service marketing and promotion,
service planning and system monitoring. In addition, City shall provide for
printed bus schedules and other marketing brochures.
GATransit\Transit Current Projects\Operations RMProcurement Period\Agreement.doc
U
6. Invoice. Contractor shall submit monthly invoices to City for services provided as
follows: all revenue vehicle mileage costs. Services and reimbursements shall be
invoiced to City not later than the tenth (10th) day of the month following the service
month provided. No charge will be allowed for missed revenue vehicle miles
during revenue service. Fixed monthly rate shall be billed monthly. All required
reports and submissions as described in attached Exhibit A, shall be accurately
completed and submitted to City prior to payment of monthly fee.
7. Payment. All payments by City shall be made in arrears after the service has been
provided. Payment shall be made by City no more than thirty (30) days from City's
receipt of the invoice. Payment will be made on a monthly basis. If City disputes any
items on an invoice for a reasonable cause, City may deduct that disputed item from the
payment but shall not delay payment for the undisputed portions.
The amounts and reasons for such deletions shall be documented to Contractor within
fifteen (15) working days after receipt of invoice by City. City shall assign a sequential
reference number to each deletion.
Payments shall be by voucher or check payable to and mailed first class to:
8. Farebox Revenue. All farebox revenues collected by Contractor are the property of
City. Operating revenues include all fares, sales of tickets and passes, and advertising
sales. Contractor shall be responsible for handling farebox revenues in the manner
discussed in attached Request for Proposal, Section 3 and as necessary for City to meet
state and federal funding requirements.
9. Control. In performing the services under this Agreement, the Contractor shall act as
an Independent Contractor and shall have full control of the work and the manner in
which it is performed. Contractor in no circumstances shall be considered as an agent
or employee of City, and Contractor's employees are not entitled to participate or be
part of any pension plan, insurance, bonus, or any similar benefits, which City provides
its employees. A certificate must be completed and submitted with the bid (Refer to
Certification 2.7).
10. Management. During the terms of this Agreement, Contractor shall provide sufficient
executive administrative personnel as shall be necessary and required to perform all
duties and obligations under the terms hereof, and described in attached Exhibit A,
Scope-of-Work. All management personnel to be employed must be committed
exclusively to the performance of work on City's project and shall not perform any
G:\Tmnsit\Tmnsit Current Projecis\Operations RMProcurcment Pcriod\Agrcement.doc
other services for Contractor or other entity. Management personnel shall be full-time
employees of Contractor.
11. Medical Assistance to Passengers. Contractor's employees shall not be required to
perform any medical or quasi-medical functions for passengers. In the event of illness
on board a vehicle, the driver shall advise the dispatcher by radio and may proceed
immediately to a medical facility for help, on the instructions of dispatcher.
12. Uniforms. Contractor shall purchase uniforms as specified by City for all employees
and shall require the employees to wear them in accordance to Exhibit A, Scope of
Work. The design, type and logo of the uniforms shall be subject to City's approval.
Uniforms shall include, but not be limited to shirts, pants and jackets. Drivers shall be
required to maintain neat and clean appearances.
13. Modifications of Agreement. This writing constitutes the entire Agreement between
the parties relative to the matter of this Agreement and no modification hereof shall be
effective unless and until such modification is evidenced in writing signed by both
parties to this Agreement. There are no understandings, agreements or condition with
respect to the subject matter of the Agreement except those contained in this writing.
14. Contract Assignments. This contract shall not be sold, assigned, transferred;
conveyed or encumbered by Contractor without the prior written consent of City.
Contractor shall not sell or otherwise transfer its interest in this contract without prior
written notification to City. Upon receiving such notification from Contractor, City
may, at its sole discretion, decide to exercise its right to terminate this contract.
Subject to the provision regarding assignment, this contract shall be binding upon the
heirs, executor, administrators, successors and assigns of the respective parties.
15. Disputes. Except as otherwise provided in this contract, any dispute concerning a
question of fact arising under this contract which is not disposed or by agreement shall
be decided by City's Transit Manager, who shall produce his decision to writing and
mail or otherwise furnish a copy thereof to Contractor. The decision of the Transit
Manager shall be final and conclusive unless a written appeal is furnished by the
Contractor to City's Public Works Director within thirty (30) days from the date of
receipt of such copy.
The Public Works Director shall review said appeal within forty-five days of receipt
and shall determine the validity of the appeal. The decision of the Public Works
Director shall be final and conclusive unless within thirty (30) days from the date of
receipt of such copy, Contractor mails or otherwise furnishes to City's City Council a
written appeal.
The decision of City Council for the determination of such appeals shall be final and
conclusive unless determined by arbitration under the rules of the California Arbitration
Act (CCP 1280-1294.2) to have been determined fraudulent, or capricious, arbitrary, or
GATransit\Transit Current Projects\Operations RMPmcurement Period\Agr ment.doc
o7_��,
so grossly erroneous as necessarily to imply bad faith, or not supported by substantial
evidence.
In connection with any appeal proceeding under this clause, Contractor shall be
afforded an opportunity to be heard and to offer evidence in support of its appeal.
Pending final decision of said dispute as describe herewith, the Contractor shall
perform all required duties and obligations of the contract during the dispute resolution
process and at not time shall service be interrupted due to conflict resolution.
This paragraph does not preclude consideration of questions of law in connection with
decisions provided for in this clause, provided that nothing in this contract shall be
construed as making final decision of any administrative official, representative or
board on a question of law. Please refer to Paragraph 58.
16. Stop-Work. City may stop work on its transportation system upon forty-eight (48)
hours written notice to Contractor. City shall be liable for all relevant costs defined
under Section 6 incurred prior to the stop-work period and for restart, if any.
17. Termination. The contract may be terminated for .reasons of City's convenience or
Contractor's breach or insolvency. Notice of termination shall be accomplished by
registered, or certified mail.
a. Termination for Convenience. City may terminate this contract, in whole or in
part, at any time by written notice to the Contractor when it is in the City's best
interest. The Contractor shall be paid its costs, including contract closeout costs,
and profit on work performed up to the time of termination. The Contractor shall
promptly submit its termination claim to City to be paid the Contractor. If the
Contractor has any property in its possession belonging to City, the Contractor will
account for the same, and dispose of it in the manner City directs.
b. Termination for Breach or Cause. If the Contractor does not deliver supplies in
accordance with the contract delivery schedule, or, if the contract is for services, the
Contractor fails to perform in the manner called for in this contract, or if the
Contractor fails to comply with any other provisions of this contract, City may
terminate this contract for default. Termination shall be effected by serving a notice
of termination on the contractor identifying the manner in which the Contractor is in
default of this Contract. The contractor will only be paid the contract price for
supplies delivered and accepted, or services performed in accordance with the
manner of performance set forth in the contract.
If it is later determined by City that the Contractor had an excusable reason for not
performing said service, such as a strike, fire, or flood, events which are not the
fault of or are beyond the control of the Contractor, City, after setting up a new
delivery of performance schedule, may allow the Contractor to continue work, or
treat the termination as a termination for convenience.
GATransit\Transit Current Projects\Operations RMProcurentent Period\Agreement.doc
c. Opportunity to Cure. City at its sole discretion may, in the case of a termination
for breach, default, or cause allow the Contractor ten (10) days in which to cure the
defect. In such case, the notice of termination will state the time period in which
cure is permitted and other appropriate conditions.
If Contractor fails to remedy to City's satisfaction the breach or default or any of the
terms, covenants, or conditions of this Contract within ten (10) days after receipt by
Contractor or written notice from City setting forth the nature of said breach or
default, City shall have the right to terminate the Contract without any further
obligation to Contractor. Any such termination for default shall not in any way act
or operate to preclude City from also pursuing all available remedies against
Contractor and its sureties for said breach or default.
d. Waiver of Remedies for any Breach. In the event that City elects to waive its
remedies for any breach by Contractor of any covenant, term or condition of this
Contract, such waiver by City shall not limit City's remedies for any succeeding
breach of that or of any other term,covenant, or condition of this Contract.
e. Termination for Default. If the Contractor fails to deliver supplies or to perform
the services within the time specified in this contract or any extension or if the
Contractor fails to comply with any other provisions of this contract, City may
terminate this contract for default. City shall terminate by delivering to the
Contractor a Notice. of Termination specifying the nature of the default. The
Contractor will only be paid the contract price for supplies delivered and accepted,
or services performed in accordance with the manner or performance set forth in
this contract.
If; after termination for failure to fulfill contract obligations, it is determined that
the Contractor was not in default, the rights and obligations of the parties shall be
the same as if the termination had been issued for the convenience of the City.
18. Communications. All notices hereunder and communications with respect to this
Agreement shall be effective upon the mailing thereof by registered or certified mail,
return receipt requested, and postage prepaid to the persons named below:
If to Contractor: Mr. Craig Smedman
10805 Holder Street, Suite 25
Cypress CA 90630
GATransit\Transit Current Projects\Operations RMProcurentent Period\Agreetnent.doc
, J
With Copy to: Richard C. Clair, President
One Centennial Plaza
705 Central Avenue, Suite 500
Cincinnati, OH 45202
If to SLO Transit SLO Transit
955 Morro Street
San Luis Obispo, CA 93449
Attn: Transit Manager
All other communications, invoices, reports, etc., shall be made to the Transit Manager
of City.
19. Proprietary Rights. All inventions, improvements, discoveries, proprietary rights,
patents and copyrights made by Contractor under this Agreement shall be made
available to City with no royalties, charges or other costs, shall be governed by the
provisions of 49 C.F.R 18.34. All manuals prepared by Contractor under this
Agreement shall be made available to City at no charge and become property of City.
The required financial and activity reports per other sections of this Agreement are
excluded from this provision and shall be owned by City. City may make presentations
and releases relating to the project. Any report, public releases, papers and other formal
publications shall be subject to the approval of City, and if appropriate, the Federal
Government, before they are released.
20. Shortages and Delays. Contractor shall not be held responsible for losses, delays,
failure to perform, or excess costs caused by events beyond the control of.Contractor.
Such events may include, but are not limited to, the following: Acts of God, fire,
epidemics, earthquake, flood, or other natural disaster; acts of government or public,
riots, war, civil disorder, or fuel shortages. However, Contractor shall not receive
payment for the revenue vehicle mileage rate and only the mutually agreed during the
period of time that service is not provided. Contractor also grants City the right to
provide these services through other means on a temporary basis should Contractor be
unable to perform said services.
21. Audit. Contractor shall comply with the following: .
(a) General. Contractor shall permit the authorized representatives of City, San Luis
Obispo Council of Governments, State of California, the U.S. Department of
Transportation, and the Comptroller General of the United States to inspect and
audit all data and records of the Contractor relating to performance under this
Agreement. Contractor shall submit quarterly an unaudited report of actual
expenditures (both direct and indirect costs) per the Uniform System of
Accounts (Section 15).
Gt\Transit\Transit Cutmnt Projects\Opemtions RPP\Procumment Period\Agreement.doc
C3
(b) Audit Settlement. At any time, City may, at its own cost, conduct or have
conducted an audit of the Contractor. If the audit determines that City's dollar
liability for Contractor's services is less than payments made by City to Operator,
then Contractor will pay the difference in cash to City, or, at City's option, credit.
such overpayment against any future amounts owed by City to Contractor. If the.
audit determines that City's dollar liability for services provided under the contract
is more than payments made by City to Contractor, then City will pay the difference
to Contractor in cash.
22. Transportation Data Reporting. Contractor will collects and report operating and
financial data to City in accordance with the California Public Utilities Code; Chapter
4, Section 99243, and California Administrative Code Title 21, Chapter 3, Subchapter
2, as required under California Transportation Development Act, and of the Uniform
Financial Accounting and Reporting Elements (FARE) as required under FTA National
Transit Database (formerly known as Section 15 of the Urban Mass Transportation Act
of 1964).
23. Worker's Compensation. Contractor certifies that it is aware of the provisions of the
Labor Code of the State of California, which requires compensation and understands
self-insurance requirements in accordance with the provisions of that Code, and it
certifies that it will comply with such provisions before commencing with the
performance of the work of this Agreement.
24. Contractors' Employee Responsibilities. Employees shall at all times remain the sole
employees of Contractor, and Contractor shall be solely responsible for payment of all
employees' wages and benefits. Contractor, without any cost or expense to City, shall
faithfully comply with the requirements of all applicable State and Federal enactments
with respect to employer's liability, workers compensation, unemployment insurance
and other forms of Social Security, and also with respect to withholdings of income tax
at its source from wages of said employees. Contractor shall indemnify and hold
harmless City from and against any and all liability, damages, claims, costs and
expenses of any nature arising from alleged violation of such enactments or from any
claims of subrogation provided for in such enactment or otherwise. The Contractor
shall comply with the requirements of FTA Grant Agreement, Part H, Section 119(b).
25. Transit Employee Protective Agreements. (I) The Contractor agrees to the comply
with applicable transit employee protective requirements as follows:
(a),General Transit Employee Protective Requirements - To the extent that FTA
determines that transit operations are involved, the Contractor agrees to carry out the
transit operations work on the underlying contract in compliance with terms and
conditions determined by the U.S. Secretary of Labor to be fair and equitable to protect
the interests of employees employed under this contract and to meet the employee
protective requirements of 49 U.S.C. A 5333(b), and U.S. DOL guidelines at 29 C.F.R.
Part 215, and any amendments thereto. These terms and conditions are identified in the
letter of certification from the U.S. DOL to FTA applicable to the FTA Recipient's.
GATtansiffransit Current Projects\Operations RMProcurement PeriodWgreement.doc
project from which Federal assistance is provided to support work on the underlying
contract. The Contractor agrees to carry out that work in compliance with the
conditions stated in that U.S. DOL letter. The requirements of this subsection (1),
however, do not apply to any contract financed with Federal assistance provided by
FTA either for projects for elderly individuals and individuals with disabilities
authorized by 49 U.S.C. § 5310(a)(2), or for projects for nonurbanized areas authorized
by 49 U.S.C. § 5311. Alternate provisions for those projects are set forth in subsections
(b) and (c) of this clause.
(b)Transit Employee Protective Requirements for Projects Authorized by 49 U.S.C.
5310(a)(2) for Elderly Individuals and Individuals with Disabilities - If the contract
involves transit operations financed in whole or in part with Federal assistance
authorized by 49 U.S.C. § 5310(a)(2), and if the U.S. Secretary of Transportation has
determined or determines in the future that the employee protective requirements of 49
U.S.C. § 5333(b) are necessary or appropriate for the state and the public body
subrecipient for which work is performed on the underlying contract, the Contractor
agrees to carry out the Project in compliance with the terms and conditions determined
by the U.S. Secretary of Labor to meet the requirements of 49 U.S.C. § 5333(b), U.S.
DOL guidelines at 29 C.F.R. Part 215, and any amendments thereto. These terms and
conditions are identified in the U.S. DOL's letter of certification to FTA; the date of
which is set forth Grant Agreement or Cooperative Agreement with the state. The
Contractor agrees to perform transit operations in connection with the underlying
contract in compliance with the conditions stated in that U.S. DOL letter.
(c) Transit Employee Protective Requirements for Projects Authorized by 49 U.S.C.
5311 in Nonurbanized Areas- If the contract involves transit operations financed in
whole or in part with Federal assistance authorized by 49 U.S.C. § 5311, the Contractor
agrees to comply with the terms and conditions of the Special Warranty for the
Nonurbanized Area Program agreed to by the U.S. Secretaries of Transportation and
Labor, dated May 31, 1979, and the procedures implemented by U.S. DOL or any
revision thereto.
(d) The Contractor also agrees to include any applicable requirements in each
subcontract involving transit operations financed in whole or in part with Federal
assistance provided by FTA.
26. Insurance.
The Contractor shall procure and maintain for the duration of the contract insurance
against claims for injuries to persons or damages to property which may arise from or
in connection with the performance of the work hereunder by the Contractor, its agents,
representatives, employees or subcontractors.
Minimum Scope of Insurance. Coverage shall be at least as broad as:
1. Insurance Services Office Commercial General Liability coverage (occurrence form
CG 0001).
GATransiffrr=sit Current ProjwAOperations RMProcurement Period\Agreement.doc
2. Insurance Services Office form number CA 0001 (Ed. 1/87) covering Automobile
Liability, code 1 (any auto).
3. Workers' Compensation insurance as required by the State of California and
Employer's Liability Insurance.
Minimum Limits of Insurance. Contractor shall maintain limits no less than:
1. General Liability: $2,000,000 per occurrence for bodily injury, personal injury and
property damage. If Commerciai General Liability or other form with a general
aggregate limit is used, either the general aggregate limit shall apply separately to
this project/location or the general aggregate limit shall be twice the required
occurrence limit.
2. Automobile Liability`. $2,000,000 per accident for bodily injury and property
damage.
3. Employer's Liability: $1,000,000 per accident for bodily injury or disease.
Deductibles and Self-Insured Retentions. Any deductibles or self-insured retentions
must be declared to and approved by the City. At the option of the City, either: the
insurer shall reduce or eliminate such deductibles or self-insured retentions as respects
the City, its officers, officials, employees and volunteers; or the ,Contractor shall
procure a bond guaranteeing payment of losses and related investigations, claim
administration and defense expenses.
Other Insurance Provisions. The general liability and automobile liability policies
are to contain, or be endorsed to contain, the following provisions:
1. The City, its officers, officials, employees, agents and volunteers are to be covered
as insured as respects: liability arising out of activities performed by or on behalf of
the Contractor; products and completed operations of the Contractor; premises
owned, occupied or used by the Contractor; or automobiles owned leased, hired or
borrowed by the Contractor. The coverage shall contain no special limitations on
the scope of protection afforded to the City, its officers, official, employees, agents
or volunteers.
2. . For any claims related to this project, the Contractor's insurance coverage shall be
primary insurance as respects the City, its officers, officials, employees,agents and
volunteers. Any insurance or self-insurance maintained by the City, its officers;
officials, employees, agents or volunteers shall be excess of the Contractor's
insurance and shall not contribute with it.
3. Any failure to comply with reporting or other provisions of the policies including
breaches of warranties shall not affect coverage provided to the City, its officers,
officials, employees, agents or volunteers.
4. The Contractor's insurance shall apply separately to each insured against whom
claim is made or suit is brought, except with respect to the limits of the insurer's
liability.
5. Each insurance policy required by this clause shall be endorsed to state that
coverage shall not be suspended, voided, canceled by either party, reduced in
coverage or in limits except after thirty (30) days' prior written notice by certified
mail, return receipt requested, has been given to the City.
GATransit\Transit Current Projects\operations RPP\Procurement Period\Agreement.doc
a -a.
Acceptability of Insurers. Insurance is to be placed with insurers with a current
A.M. Best's rating of no less than A:VII.
Verification of Coverage. Contractor shall furnish the City with a certificate of
insurance showing required coverage. Original endorsements effecting general
liability and automobile liability coverage are also required by this clause. The
endorsements are to be signed by a person authorized by that insurer to bind
coverage on its behalf. All endorsements are to be received and approved by the
City before work commences.
Subcontractors. Contractor shall include all subcontractors as insured under its
policies or shall furnish separate certificates and endorsements for each
subcontractor. All coverages for subcontractors shall be subject to all of the
requirements stated herein.
27. Letter of Credit. Prior to execution of this Agreement, the prospective Contractor
shall furnish to City a Letter of Credit (LOC) in the amount equal to.Two Hundred
Thousand Dollars ($200,000). The Letter of Credit (LOC) shall be made payable to
City and shall be held by City throughout the term of this Agreement to guarantee
performance by Contractor.
28. Fidelity Bond. During the period of time this Agreement shall be in effect, Contractor
shall cause its staff personnel to be covered under an appropriated bond protecting City
from employee theft up the amount of fifty thousand dollars ($50,000) with respect to
any single occurrence by Contractor's employees. Contractor shall furnish City with a
certificate from it fidelity bond carrier showing proof of such coverage. Said coverage
shall provide for notification of City directly by Contractor's,bond carrier at least
fifteen (15) days in advance in the event of cancellation or change of such coverage.
29. Prime Contractor Responsibilities. Contractor is required to assume responsibility
for all services identified in this Contract whether or not Contractor Possesses skills to
perform said services within its organization. City will consider Contractor to be the
sole point of contact with regard to contractual matters, including payment of any and
all charges resulting from the contract. No subcontract will be entered into by
Contractor to perform work relating to this Agreement without the prior written
authorization of City.
30. Nondiscrimination.
a. Contractor shall comply with all applicable federal, state and local laws, rules
and regulations with regard to discrimination in employment because of age,
race, religion, color, sex, physical, or mental disability, marital status or national
origin. Contractor shall take affirmative action to insure that applicants are
employed and that employees are treated during their employment without
regard to their age, race religion, color, sex, physical or mental disability, marital
status or national origin. Such actions shall include, but not be limited to, the
GATransit\Transit Current Projects\Operations RPP\Procutemcnt PerlodWgreement.doc
following: employment, upgrading, demotions or transfer; recruitment or
recruitment advertising; layoff or termination; rate of pay or other forms of
compensation; and selection for training, including apprenticeship.
b. Contractor shall also comply with the requirements of Title VI of the Civil
Rights Act of 1964 (P.L. 88-352) and with all applicable regulations, statutes,
laws, etc., promulgated pursuant to the civil rights acts of the state and federal
government now in existence of hereafter enacted. Further, Contractor shall also
comply with the provisions of Section 1735 of the Labor Code.
C. , The Contractor agrees to comply with applicable requirements of the Americans
with Disabilities Act of 1990, as in reference to FTA Grants Agreement, Part H.
31. Disadvantaged Business Enterprise. In connection with the performance of this
Agreement, Contractor will cooperate with City in meeting City's commitments and
goals with regard to the maximum utilization of Disadvantaged Business Enterprise.
32. Conflict of Interests. Contractor agrees that it presently has no interest, which would
conflict in any manner or degree with the performance of its services hereunder.
Contractor further agrees that in the performance of this contract, no person having
such interest shall be employed. A certificate must be completed and submitted with the
bid (Refer to Certification 2.8).
33. Conflict of Transportation Interests. Contractor shall not divert any revenues,
passengers or other business from City's project to any taxi or other transportation
operation unless directed by the City.
34. Title to Supplies and Equipment. Title to supplies and equipment is described below.
In the event parts, supplies, and equipment purchased by Contractor in connection with
the performance of this Agreement are fully reimbursed or purchased by City, they
shall become the property of City.
Contractor agrees to the following:
a. City's Beginning Inventory. Contractor shall agree to purchase City's bus
parts, components, and supplies, fuel, oil, lubricants, cleaning supplies,
antifreeze, batteries, and other consumable items at City's cost upon the
execution of this Agreement. City reserves the right to purchase any portion of
the ending inventory from the Contractor. Payment will be reconciled on the last
day of this Agreement.
b. Contractor. Bus parts and supplies shall be purchased by the Contractor and
shall be the property of the Contractor. The Contractor shall maintain a
reasonable spare inventory. At all times the Contractor shall maintain a
complete and accurate inventory listing of available parts including item name
and description, purchase price, quantity, and location of each part.
GATransit\Transit Current Projects\Operations RMProcumment Period\Ageement.doc _^/
35. Headings. The headings or titles to sections of this Agreement are not part of the
Agreement and shall have no effect upon the construction or interpretation of any party
of this Agreement.
36. Retention of Records. Contractor and City agree to retain all documents relevant to
this Agreement for four years from the termination of the contract or until all
Federal/State audits are complete for the fiscal year, whichever is later. Upon request,
Contractor shall make available these records to City, State, or Federal government's
personnel.
37. Right to Adequate Assurance of Performance. Both Contractor and City entering
this Agreement accepts their obligation with the expectation of receiving due
performance that will not be impaired. When commericially reasonable grounds for
uncertainty arise with respect to the performance of either party, the other may, in
writing, demand adequate assurance of due performance and until assurance is
received, may, if commercially reasonable, suspend any performance for which the
agreed return has not been received. "Commercially reasonable" includes the conduct
of a party with respect to performance under this Agreement, and also conduct of a
party with respect to other Agreements with parties to this Agreement or others. After
receipt of a justified demand, failure to provide assurance within a reasonable time, not
to exceed thirty (30) calendar days, such assurance of due performance as is adequate
under the circumstances of the particular case is a repudiation of this Agreement.
Acceptance of any improper delivery, services or payments does not.prejudice the
aggrieved party's right to demand adequate assurance of future performance.
38. Indemnification. Contractor hereby warrants that all its work will be performed in
accordance with generally accepted professional practices and standards as well as the
requirements of applicable federal, state, and local laws, regulations and ordinances. It
being understood that acceptance of Contractor's work by City, shall not operate as a
waiver or release of Contractor. Contractor will be responsible for obtaining any and
all permits at its expense and shall indemnify, hold harmless and defend City its agents,
and employees from and against any and all actions, claims, damages, environmental
contaminations and spills, disabilities or expenses, and witness costs that may be
asserted by any person entity arising out of or in connection with the activities
necessary to perform the services and complete the tasks provided for herein whether or
not there is concurrent passive or active negligence or willful misconduct of City,
except where the claim is based solely on the negligence or willful misconduct of City.
This indemnification obligations not limited in any way by any limitation of the amount
or type of damages or compensation payable by or for the services and tasks described
in this Agreement or its agency under Workers' Compensation acts, disability benefit
acts or other employee benefit acts.
39. Merger. This contract sets forth the entire agreement between the parties with respect
to subject matter thereof, and supersedes and replaces all proposals, negotiations,
representations and implied obligations. The obligations, liabilities and remedies set
GATransiffransit Current Projects\Operations RMProcumment Period\Ageement.doc
a a�
forth herein are exclusive and shall operate as limitations on any action brought in
connection with the said services, including an action in tort.
40. Additional Services. Additional services outside normal operating hours. shall be
considered extra services. Additional services as authorized in writing by City or its
designee will be paid for on an individual basis at the regular revenue vehicle mileage
rate for Price Formula A as set forth in Paragraph 5 of this Agreement and will be billed
separately from this Agreement. Compensation for additional services shall be in
excess of the maximum price defined in the Maximum Obligation as set forth in
Paragraph 4 of this Agreement.
41. Changes in Scope-of-Work. City, without invalidating the contract, may order
additions to or deletion of service hours for fixed route services or deletions for the
work to be performed. If justified, the contract charges will be adjusted accordingly.
Any alteration(s) made in the provisions, which are part of this contract shall not
operate to release any surety or sureties from liability or any bond(s) or Letter(s) of
Credit (LOC) attached thereto and make a part thereof. New provisions must be
mutually agreeable to City and Contractor. City shall have the right to make changes in
routes, schedules, and other elements of work not involving extra cost and not
inconsistent with the work to be performed. In addition, City may make alterations or
additions in routes or schedules to respond to the demands and special events and other
occurrences, provided that if additional justified costs to Contractor results therefrom,
extra payment will be made by City in an amount equal to the extended revenue vehicle
mileage rate specified in the contract or as may be other wise agreed to by City and
Contractor in advance of such extra work.
42. Conflicting Use. Contractor shall not use any vehicle, equipment, personnel or other
facilities, which are dedicated by City for performing services under this Agreement for
any use whatsoever other than provided for in this Agreement.
43. Liaison. Contractor shall assist and cooperate with City in meeting the objectives of
providing quality public transportation services. Contractor shall perform close liaison
activities, coordination and cooperation with City on matters related to operations,
monitoring, reporting, and service performance measurements.
44. Failure to Perform. City recognizes that the operation of a public transit.service is
subject to circumstances and variables beyond the control of Contractor. However, a
properly run service will take steps to reasonably accommodate such circumstances
without compromising the safety or reliability of the service.
City and Contractor will monitor service performance to assure that strict adherence of
routes and schedules are being maintained. If performance is found to be substandard,
City may request in writing adequate assurance of performance as defined under
Paragraph 37 of this Agreement, and subject to Service Performance Standards in
Section 3.25.
GATransit\Transit Current Projects\Operations RMProcurement Period\Agreement.doc
Contractor understands that continual substandard performance such as service runs
departing ahead of schedule, missed service runs, service runs departing scheduled
stops fifteen minutes or more after the scheduled time, frequent accidents and safety
violations, frequent vehicle failure and frequent public complaints regarding driver
behavior or dirty vehicles are grounds for termination of this Agreement.
45. Liquidated Damages. Liquidated damages may be assessed as described in Exhibit A,
Scope-of-Work.
46. Waivers. Neither City's review, approval or acceptance of payment for the services
required under this Agreement shall be construed to operate as a waiver of any rights
under Agreement or of any cause of action arising out of the performance of the
Agreement, and Contractor shall be and remain liable to City in accordance with
applicable law for all damages to City caused by Contractor negligent act, error or
omission in the performance of any of the services furnished under this Agreement.
The parties agree that City shall have the final authority to require the discharge by
Contractor of any employee of Contractor. The waiver by City of any breach of any
term,'covenant, condition.or agreement herein contained shall not be deemed to be a
waiver of any subsequent breach of the same or of a breach of any other term, condition
or agreement herein contained.
47. Interpretation, Jurisdiction, and Venue. The contract shall be construed and
interpreted solely in accordance with the laws of the State of California; venue or any
suit, right or cause of action arising under or in connection with this Agreement shall be
exclusively in San Luis Obispo, California.
48. Severability. If any provision of this Agreement or the application thereof to any
person or circumstances is rendered or declared illegal for any reason or shall be invalid
or unenforceable, the remainder of the Agreement and application of such provision to
other persons or circumstances shall not be affected thereby but shall be enforced to the
greatest extent permitted by applicable law. The parties agree to negotiate in good faith
for a proper amendment to this Agreement in the event any provision hereof is declared
illegal, invalid, or unenforceable.
49. Debarred Bidders. The Contractor agrees to obtain certifications on debarment and
suspension from its third party contractors and subcontractors and otherwise comply
wit U.S. Department of Transportation regulations, "Governmentwide Debarment and
Suspension (Nonprocurement) and Governmentwide Requirements for Drug-Free
Workplace (Grant)", in compliance with 49 C.F.R. Part 29 and FTA Grant Agreement,
Part II. Sec. 114(m). A certificate must be completed and submitted with the bid (Refer
to Certification 2.4).
50. General Equipment Requirements.
Above Grade Fueling Facility. The Contractor, at its sole discretion and its own
expense, may decide-to purchase and install an above grade fuel storage for all engine
types with the exception of compressed natural gas (CNG). In the event that the
GATm iATransit Curren Projects\Operations RMProcurement PeriodWgreement.doc
Contractor should decide to exercise this option, Contractor shall comply with all
associated federal, state and local, but not limited to, regulations, and monitoring
requirements. Contractor shall be responsible for all associated costs to the preparation
of all applications, permits, and licenses to the above grade fuel storage facilities. In
addition, the Contractor shall be responsible for all associated costs for the installation
and construction of infrastructure and all other costs for the installation of the above
grade fuel storage facilities. The Contractor shall, at its own expense, be responsible
for all regulatory permits, maintenance, and all other costs of operating and using the
above grade fueling facilities. Contractor shall assume all environmental responsibility
associated to the fuel facility and indemnify the City for any responsibility of
environmental contamination, fines, and/or damage associated to the fueling facilities.
In the event that the Contractor should exercise this option, the Contractor will be
subject to all city and local requirements associated to the purchase and installation of
above grade fueling facility. The.City reserves the right to either offer a price for
ownership or require Contractor to remove above-grade fueling facilities and
return property to equal or better condition to City's satisfaction prior to the
effective date of the Contract.
Provision of Electronic Registering Fareboxes. Contractor agree to purchase and
install electronic registering fareboxes with transfer dispenser for each revenue vehicle
and the associated hardware and software, money counter, and vault system in
accordance with Appendix F in Exhibit B of this Agreement.
Contractor agrees that all equipment shall be factory new or like-new with full
manufacturer's warranty and shall be approved by City. Contractor agrees that all
electronic registering fareboxes and associated equipment shall be the sole property of
the City after installation and upon acceptance in writing from the City. City will
conduct acceptance inspection, which may include functional testing prior to
acceptance. Upon the expirationof the Contract, the Contractor agrees, at the City's
sole discretion and reserved right,. the City may return all electronic registering
fareboxes and associated equipment and the Contractor will reimburse the City the full
purchase price of electronic registering fareboxes and associated equipment per Form
1.5 Exhibit B of this Agreement.
51. Public Contact Code Section 10162 Questionnaire. In accordance with Public
Contract Code Section 10162, the Contractor shall complete under penalty of perjury.
The questionnaire must be completed and submitted with the bid (Refer to Certification
2.9).
52. Integrity Certification. Contractor must include, with their proposal, properly
completed and executed certification regarding Lower Tier Debarment, Suspension and
other Responsibility Matter. A certificate must be completed and submitted with the bid
(Refer to Certification 2.6).
GATransit\Trattsit Current Projects\Operations_RMPmcurement Perio&Agr=ment.doc
o?-a7
i
53. Energy Conservation. The Contractor shall comply with mandatory standards and
policies relating to energy efficiency that are contained inapplicable State energy
conservation plans issued in compliance with the Energy Policy and Conservation Act,
42 USC 6321 et seg.
54. Air Pollution. The Contractor may be required to submit evidence to City that the
governing air pollution criteria will be met. The evidence and related documents will
be retained by the Contractor for on-site examination by FTA.
55. Notice of Federal Requirements. The Contractor understands that Federal laws,
regulations, policies, and related administrative practices applicable to the Agreement
on the date the Agreement is executed may be modified from time to time. The
Contractor agrees that the most recent. of such Federal requirements will govern the
administration of this Agreement at any particular time, except if there is sufficient
evidence in the Agreement of a contrary intent. Such contrary intent might be
evidenced by express language in letters including those signed by the FTA
Administrator. Likewise, new Federal laws, regulations, policies and administrative
practices may be established after the date the Agreement has been executed and may
apply to this Agreement. All standards or limits set forth in this Agreement to be
observed in the performance of the project are minimum requirements.
56. Environmental Violations. The Contractor agrees to comply with all applicable
standards, orders or requirements issued under Section 306 of the Clean Air Act [42
USC 1857 (h)], Section 508 of the Clean Water Act (33 USC 368. Executive Order
11378, and Environmental Protection Agency (EPA) regulations (40 CFR, Part 15)
which prohibits the use under nonexempt Federal contracts, grants or loans, of facilities
included on the EPA List for Violating Facilities. The Contractor shall report.
violations to FTA and the US EPA Assistant Administration for Enforcement.
57. Privacy. The Contractor and its employees shall comply with the Privacy Act of 1974,
5 USC. 552a, and FTA Grant Agreement, Part 11, Section 125.
58. Arbitration. In the case of any controversy between the parties concerning but not
limited to the validity, construction or interpretation of this Agreement, the parties shall
refer such dispute in writing to an arbitrator. Each party shall appoint one person to
hear and determine the dispute and, if the two persons so selected are unable to agree,
those two persons shall select a third impartial arbitrator whose decision shall be final
and conclusion upon both parties. The cost of arbitration shall be borne by the losing
party or in such proposition as the arbitrator decides. The arbitrator may hold meetings,
hearings, and take testimony of witnesses and receive evidence, by shall not be
empowered to compel the attendance of any person or the production of any evidence.
The result of arbitration hereunder shall be binding upon the parties.
59. Disclosure of Lobbying Activities. The Contractor agrees to comply with the
provisions of 31 USC 1352, which prohibit the use of Federal funds for lobbying any
official or employee of any Federal agency, or member or employee of Congress; and
GATransiffransit Current Projects\Operations RMProcum.ment PeriodWgreement.doc
requires the Contractor to disclose any lobbing of any official or employee of any
Federal agency, or member, or employee of Congress in connections with Federal
assistance. The Contractor agrees to comply with United States Department
regulations, "New Restrictions on Lobbying," 49 CFR Part 20. A certificate must be
completed and submitted with the bid (Refer to Certification 2.5).
60. Non-Collusion Affidavit. By submitting a proposal, the prospective Contractor
represents and warrants that such a proposal is genuine and not a sham, collusive, or
made in the interest or in behalf of any person or party not therein named and that the
prospective Contractor has not directly or indirectly induced or solicited any other
Contractor to put in a sham bid, or any other person, firm or corporation to refrain from
presenting a proposal and that the prospective Contractor has not in any manner sought
by collusion to secure an advantage. If it is found that collusion exists, proposals will
be rejected and contract awards shall be null and void. A certificate must be completed
and submitted with the bid (Refer to Certification 2.1).
61. Interest of Members of or Delegates of Congress. No member of or delegate to the
Congress of the United States shall be admitted to any share or port of this contract or
to any benefit arising therefrom.
62. Drug-Free Workplace. The Contract shall comply with Government Code Section
8355 in matters relating to providing a drug-free workplace. A certificate must be
completed and submitted with the proposal (Refer to Certification 2.3).
63. Contractor's Representations. The Contractor certify that they are familiar with all
requirements of the general conditions, specifications and instructions of the City
Transit System. The Contractor is familiar with all matters affecting the performance
of the work, including all general and special laws, ordinances and regulations that may
affect the work, its performance or those persons employed therein. The Contractor is
in the business and is fully qualified and skilled in the field of public transit and is fully
willing and able to satisfy the requirements of the contract at the bid rates and any ward
of contract is 'in reliance on such representations. It shall be the Contractor's
responsibility to adhere to all federal, state, and local laws regarding the proposed
service contract.
64. Contractor's Eligibility. Contractor certifies it is not on the Comptroller General's list
of ineligible contractors.
65. Program Fraud and False or Fraudulent Statements and Related Acts. The
Contractor acknowledges that the provisions of the Program Fraud Civil Remedies
Act of 1986, as amended, 31 U.S.C. § § 3801 et M. and U.S. DOT regulations,
"Program Fraud Civil Remedies," 49 C.F.R. Part 31, apply to its actions pertaining to
this Project. Upon execution of the underlying contract, the Contractor certifies or
affirms the truthfulness and accuracy of any statement it has made, it makes, it may
make, or causes to be made, pertaining to the underlying contract or the FTA assisted
project for which this contract work is being performed. In addition to other penalties
G:\Tr sit\Tmnsit Current Projects\Opemtions RFP\Pmcumment Peiod\Agmement.doc
that may be applicable, the Contractor further acknowledges that if it makes, or
causes to be made, a false, fictitious, or fraudulent claim, statement, submission, or
certification, the Federal Government reserves the right to impose the penalties of the
Program Fraud Civil Remedies Act of 1986 on the Contractor to the extent the
Federal Government deems appropriate.
The Contractor also acknowledges that if it makes, or causes to be made, a false,
fictitious, or fraudulent claim, statement, submission, or certification to the Federal
Government under a contract connected with a project that is financed in whole or in
part with Federal assistance originally awarded by FTA under the authority of 49
U.S.C. § 5307, the Government reserves the right to impose the penalties of 18 U.S.C.
§ 1001 and 49 U.S.C. § 5307(n)(1) on the Contractor, to the extent the Federal
Government deems appropriate.
The Contractor agrees to include the above two clauses in each subcontract financed in
whole or in part with Federal assistance provided by FTA. It is further agreed that the
clauses shall not be modified, except to identify the subcontractor who will be subject
to the provisions.
66. Governing Law. The rights, obligations, and remedies of the parties shall be
governed by the laws of the State of California. Whenever there is no applicable state
statute or decisional precedent governing the interpretation of, or disputes arising
under or related to, this contract, then Federal common law, including the law
developed by Federal boards of contract appeals, the United States Claims court
(formerly the Court of Claims), and the Comptroller General of the United States,
shall govern. Venue of any action shall lie exclusively in the County of San Luis
Obispo, California. This is the complete agreement between the parties. If any
provision of the contract is fund to be invalid or unenforceable, the remaining
provisions shall not be impaired.
67. Patent Rights. FOR ALL PLANNING, RESEARCH, DEVELOPMENT, OR
DEMONSTRATION UNDER THIS CONTRACT OR PROJECT:
If any invention, improvement, or discovery of City or any of its third party
contractors is conceived or first.actually reduced to practice in the course of or under
this Project, and that invention, improvement, or discovery is patentable under the
laws of the United States of America or any foreign country, City shall notify FTA
immediately and provide a detailed report. The rights and responsibilities of City, its
third party contractors and the Government with respect to such invention,
improvement, or discovery, will be determined in accordance with applicable Federal
laws, regulations, policies, and any waiver thereof.
Any patentable result arising out of this contract, as well as all information, designs,
specifications, know-how, data, and findings shall be made available to City and the
government for public use, unless the Department of Transportation shall, in a
GATtansit\Transit Current Projects\Operations RMProcurement Period\Agreement.doc
a��
specific case where it is legally permissible, determine that it is in the public interest
that it not be so made available.
If in accordance with this agreement, the Contractor furnishes research, development
or consultative services in connection with the work and, if in the course of such
research, development or consultation patentable subject matter is produced by the
vendor, its officers, agents, employees, subcontractors, or suppliers, City shall have
without cost or expense to it, an irrevocable, non-exclusive, royalty-free license to
make, have made, and use, either itself or by anyone on its behalf, such matter in
connection with any activity now or hereafter engaged in or permitted by City. .
Promptly, upon request by City, the Contractor shall furnish or obtain from the
appropriate person a form of license satisfactory to City, but it is expressly
understood and agreed that, as between City and the Contractor, the license herein
provided for shall nevertheless arise for the benefit of City, immediately upon the
production of said subject matter, and shall not await formal exemplification in a
written license agreement, as provided above. Such license may be transferred by
City to its successors, immediate or otherwise, in the operation or ownership of any
facility now or hereafter operated by City, but'such license shall not be otherwise
transferable.
68. Attorneys' Fees. Should either party institute any action to enforce this Agreement, or
any provision hereof,'the prevailing party in any such action or proceeding shall be
entitled to receive from the other party all costs and expenses,, including reasonable
attorney's fees.
69. Year 2000 Compliance. In addition to the warranties specified in this agreement, the
contractor warrants that any equipment, internal or external component, device, or
software Product(s) supplied under this agreement that process any date-time data
will continue to accurately process the date-time data from, into, and between the
years 1999 and 2000 and beyond, including leap year calculations. Where this
agreement requires that other products purchased under this agreement must perform
as a package or system, the product(s) will be Year 2000 Compliant as a system. In
the event of any breach of this warranty, the Contractor shall restore the Products(s)
to the same level of performance as stated herein, or repair or replace the Product(s)
with conforming Product(s) so as to minimize interruption to the Authority's ongoing
business process, time being of the essence, at Contractor's sole cost and expense.
The Contractor shall not be responsible to correct errors in the Authority's data entry
or data conversions.
For Third Party Product(s), software and hardware manufactured or developed by a
corporate entity independent from Contractor and provided by Contractor on a non-
exclusive licensing or other distribution Agreement with the third party manufacturer,
the Contractor has obtained a warranty of Year 2000 Compliance from the Third Party
Manufacturer and shall pass through said Third Party Manufacturer's warranty of Year
2000 Compliance to the Authority.
GATransiffransit Current Projects\Opemtions RMProcurement PeriodWgreement.doc
C
70. Recycled Products. The contractor agrees to comply with all the requirements of
Section 6002 of the Resource Conservation and Recovery Act (RCRA), as amended (42
U.S.C. 6962), including but not limited to the regulatory provisions of 40 CFR Part
247, and Executive Order 12873, as they apply to the procurement of the items
designated in Subpart B of 40 CFR Part 247.
71. Access Requirement for Individuals with Disabilities. The Contractor shall
comply with all applicable requirements of the "Americans With Disabilities Act of
1990" (ADA), 42 U.S.C. Sections 12101 et seq.; section 504 of the 'Rehabilitation
Act of 1973", as amended, 29 U.S.C. Section 794; section 16 of the Federal Transit
Act, as amended, 49 U.S.C. app. Section 1612; and the following regulations and any
amendments thereto:
1, U.S. DOT regulations, "Transportation . Services for Individuals with
Disabilities (ADA),"49 C.F.R. Part 37;
2. U.S. DOT regulations, 'Nondiscrimination on the Basis of Handicap in
Programs and Activities Receiving or Benefiting from Federal Financial
Assistance," 49 C.F.R. Part 27;
3. U.S. DOT regulations," Americans With Disabilities (ADA) Accessibility
Specifications for Transportation Vehicles," 49 C.F.R. Part 38;
4. Department of Justice (DOJ) regulations, "Nondiscrimination on the Basis
of Disability in.State and Local Government Services," 28 C.F.R. Part 35;
5. DOJ regulations, 'Non=discrimination on the Basis of Disability by Public
Accommodations and in Commercial Facilities," 28 C.F.R. Part 36;
6. General Services Administration regulations, "Accommodations for the
Physically Handicapped," 41 C.F.R. Subpart 101-19;
7. Equal Employment Opportunity Commission, 'Regulations to Implement
the Equal Employment Provisions of the Americans with Disabilities
Act," 29 C:F.R. Part 1630;
8. Federal Communications Commission regulations, "Telecommunications
Relay Services and Related Customer Premises Equipment for the Hearing
and Speech Disabled," 47 C.F.R. Part 64, Subpart F; and
9. FTA regulations, "Transportation For the Elderly and Handicapped
Persons," 49 C.F.R. Part 609.
GATransit\Transit Current Projects\Operations RMProcurement Period\Agreement.doc
WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by
and through their respective officers thereunto duly authorized on the day written below
their signatures.
BY CITY this day of_ , 2001.
BY CONTRACTOR the day of , 2001.
CONTRACTOR CITY
By; By:
Mayor, City Council
ATTEST: ATTEST:
By: By:
City Clerk
APPROVE AS TO FORM: APPROVED AS TO FORM:
By: By:
Contractor Legal Counsel t ga Cou 1
GATransit\Transit Curren_t Projects\Operations RMProcurement Period\Agreement.doc
3-3
i
Attachment 2
What was the process for determining the contractor for these services?
1. Schedule
• Solicitation December 13, 2000
• Pre-Proposal meeting January 9, 2001
• Written Proposal Clarification Q&A January 17, 2001
• Proposals Submission Date
—received 3 proposals (Laidlaw, First, Coach) February 9, 2001
2. Ranking of Proposals
• Written Proposals were reviewed by a City selection committee comprised of: (Transit
Manager, Public Works Administration, Public Works Maintenance, Finance and City
Attorney's office)
• Ranking Criteria were:
a) Financial stability and capabilityof the Contractor
b) Completeness of the proposal and compliance with the terms of the RFP
c) Cost of contractual services
d) Proven transit management and operational capabilities and experience
e) Large and small diesel bus maintenance experience
f) Qualifications of staff proposed
g) Creative ideas proposed to maximize safe and efficient transit operations
h) Contractor's ability to coordinate a smooth transition.
3. Transit Team Interviews
• Interview panel consisted of the aforementioned selection committee with the exception of
the representative from the City Attorney's office.
• Proposal teams were given the opportunity to clarify their understanding of the contract and
project services and show their enthusiasm for the project
• The proposal teams were queried for their understanding of particular issues relates to SLO
Transit, the City and how their companies would become of
of the City
• Individual proposal members, particularly the proposed Resident Managers, were
encouraged to expand upon their history and experience, and their innovative thoughts about
the SLO Transit system and City services.
• Company profiles were reviewed, particularly the financial status of each organization, to
determine stability, similar services that they currently provide elsewhere, and employee
organization values.
4. Final Ranking criteria were then used to determine the qualitative best company to conduct
final negotiations with. These criteria included:
• Most responsive proposal
• Written and oral proposal rankings
• Proposed costs to run the services
• Organizational attitude, performance and vitality
• Company financial status and stability
a-3�
Memorandum Attachment 3
March 23,2001
TO: Mike McCluskey,Director of Public Works
FROM: Bill Statler, Director of Finance
Carolyn Dominguez,Accounting Manager
SUBJECT: TRANSIT SERVICE PROPOSALS: LAIDLAW'S FINANCIAL STATUS
Carolyn Dominguez recently participated on the team responsible for reviewing the three
proposals we received for transit services. As part of this review process, we required audited
financial statements. One of the proposers—Laidlaw—received a "going concern" opinion from
their auditor (PricewaterhouseCoopers LLP, one of the "Big Five" audit firms) on their most
recent audit report for the year ended August 2000.
A "going concern" opinion is the one of the most serious that an auditor can express, and it is
never made lightly. It formally puts the reader of the financial statements on notice that the
auditor doubts the ability of the company to continue operations. In Note 1 in the Notes to
Consolidated Financial Statements, the auditor states:
"These consolidated financial statements have been prepared on a "going concern" basis
which contemplates the realization of assets and the settlement of liabilities and
commitments in the normal course of operations. There is substantial doubt about the
company's ability to continue as a"going concern"based on the present financial position
of the Company as described below."
During the oral interview phase of the proposal reviews, Laidlaw representatives stressed that
while the parent company was having financial difficulties (and taking significant steps to correct
them), the transit side of Laidlaw was sound. While this may be true (it is not possible to
confirm from the consolidated statements), the transit service component of their overall
operations (which also include hazardous materials handling, ambulance services, Greyhound
and health care services) is not a legally distinct part of their company; as such, even if the transit
services are financially successful, this will not keep the company from failing if there are
substantial losses from these other operations.
CONCLUSION
In contracting with a transit operator, one of our fundamental goals is to provide for stable
operations over a multi-year term. An essential building block for this is a financially viable
contactor who is likely to be in business over the contract-term.
Since we received two other acceptable proposals from firms who are financially sound, we
believe the City would be exposing itself to unnecessary risk by entering into a multi-year
contract with Laidlaw.
G:Transit Fund/Laidlaw Going Concern